SINGLE MARKET FRAMEWORK FOR INVESTMENT
FUNDS (15484/06)
Letter from the Chairman to Ed Balls MP,
Economic Secretary, HM Treasury
Sub-Committee B considered this document, and
your Explanatory Memorandum, at its meeting on 8 January 2007.
We would be grateful if you could clarify your
view on the consistency of this White Paper with the subsidiarity
principle given its references to tax policy, which as your EM
notes, is the preserve of Member States and not the Community.
Your EM does not contain any comment as to the proportionality
of the measures suggested by the White Paper; do you consider
these measures to be proportionate?
We share your welcoming of the White Paper,
and believe that it is important for the regulatory framework
to be updated and where possible simplified in order to create
a more favourable environment for investors. We will await the
subsequent legislative proposals, which you anticipate in Autumn
2007, and are content to lift scrutiny on the document.
In the meantime we would be grateful for the
opportunity to meet with you informally in the coming months at
your convenience to discuss this and other matters of emerging
significance for financial markets in the UK, and will be in touch
with your officials to arrange such a meeting in due course.
9 January 2007
Letter from Ed Balls MP to the Chairman
Thank you for your letter of 9 January 2007
seeking clarification of the Government's position in relation
to certain elements of the Commission's White Paper on investment
funds.
You ask first for clarification on the consistency
of the White Paper with the principle of subsidiarity given its
references to tax policy. In the White Paper in its comments on
the taxation of cross-border UCITS mergers, the Commission includes
within the text an implicit recognition of Member States' competence
in this area when it rejects the idea of tabling proposals for
tax harmonisation and acknowledges that these would "require
unanimous support of 27 Member States". The Commission then
goes on to say that it proposes to produce an interpretative Communication
building on relevant case law of the ECJ. This intention of the
Commission to produce a paper does not in itself give rise to
potential issues of inconsistency with the principle of subsidiarity.
As far as the substance of the Communication in concerned, the
document will of course be the subject of an Explanatory Memorandum
when it is published.
You also ask whether the Government believes
the proposals to be proportionate. We believe that they are. The
common theme of the Government's negotiating position on possible
amendments to the UCITS framework has been that rather than root
and branch reform, we should focus on small, targeted amendments
to the existing EU law to address specific problems with the functioning
of the current framework. This is precisely what the Commission
is proposing and we are therefore content that its proposed legislative
amendments are proportionate.
I also note your request for a meeting and would
be happy to accept. Our offices will be in touch in due course.
31 January 2007
Letter from the Chairman to Ed Balls MP
Thank you for your letter of 31 January 2007,
replying to my letter of 9 January. Sub-Committee B considered
your letter at its meeting on 19 February.
We were grateful to you for confirming that,
in your view, the proposals in the White Paper are both proportionate
and consistent with the principles of subsidiarity. We look forward
to receiving the Commission's Communication on ECJ case law under
a further Explanatory Memorandum.
We were also grateful to you for agreeing to
meet with the Committee at some point in the near future. The
Clerk to the Sub-Committee will contact your private office shortly
to arrange a suitable date.
26 February 2007
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